# How do you find the vertical analysis of an income statement?

## How do you find the vertical analysis of an income statement?

Vertical analysis formula = (Statement line item / Total base figure) X 100. Horizontal analysis formula = {(Comparison year amount – Base year amount) / Base year amount} X 100.

### How do you calculate horizontal analysis?

The percentage change is calculated by first dividing the dollar change between the comparison year and the base year by the line item value in the base year, then multiplying the quotient by 100. For example, assume an investor wishes to invest in company XYZ.

#### What is vertical analysis of financial statement?

Vertical analysis is the proportional analysis of a financial statement, where each line item on a financial statement is listed as a percentage of another item. Vertical analysis is also useful for trend analysis, to see relative changes in accounts over time, such as on a comparative basis over a five-year period.

**How do you calculate Horizontal analysis?**

To do a horizontal analysis, you will need the condensed balance sheets for the company that cover the years in question. Start with the first two years you have balance sheets for. Go to the first item, current assets. Subtract the value for the first year from the second. Negative values are usually denoted by parentheses rather than minus signs.

**How to calculate Horizontal analysis?**

note the line item’s amount in the base year from the financial statement.

## What is the difference between vertical and Horizontal analysis?

The key difference between horizontal and vertical analysis is that horizontal analysis is a procedure in financial analysis in which the amounts in financial statements over a certain period of time is compared line by line in order to make related decisions whereas vertical analysis is the method…

### What is an example of Horizontal analysis?

Example of Horizontal Analysis. Horizontal analysis typically shows the changes from the base period in dollar and percentage. For example, when someone says that revenues have increased by 10% this past quarter, that person is using horizontal analysis.